Saturday, December 22, 2007

Retail worker woes

IRS orders FedEx to pay $319 million in illegal independent contractor scam. There are many businesses that were wrongly advised to save money by classifying their employees as independent contractors. This was just another way of cutting pay and benefits. Especially if you do it to employees who are truly not independent contractors this can come back to bite the business in the ass.

Another way to screw employees to benefit the bottom line was followed by Circuit City. They fired over 10% of their retail sales clerks because they figured they were paying them too much. They were making about $14-$15 an hour. They hired new people at $9 an hour. Guess what happened?

Circuit City is now losing money and the stock price is down 75%. The only reason to go to Circuit City was for the knowledgeable salespeople it fired. How is management being rewarded for this mess? Because their stock options are worthless executives are getting "retention bonuses" to keep the team that was responsible for this together. For executive VP's these bonuses are $1 million dollars. Ho, Ho, Ho, for those top 0.2%. This is clearly a company to avoid - investing in, working for, or shopping in.

At times I am glad I no longer work in retail. I loved it but employees are repeated screwed by the financial dealings loosely referred to as Wall Street.

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